Weichai Power's profit margins record high annual growth
Weichai Power is principally engaged in the design, development, production, sales, and maintenance of diesel engines and related parts, as well as diesel engines and ancillary products. Among them, the vehicle and the assembly accounted for 53.86% of the main business income, the engine accounted for 28.42%, and other auto parts accounted for 11.68%. The company's product development capability ranks in the forefront of the domestic industry, and the overall level of technology and equipment ranks the leading position in China. The company’s WD615 and WD618 diesel engines have an average occupancy rate of over 75% in the heavy-duty automotive and construction machinery markets. In recent years, the company has achieved 10L/12L high power. Diesel engines have always maintained market leadership.
The analysis: The company's high profit margin this year is mainly due to the rapid recovery of downstream orders and the increase in the proportion of high-horsepower and high-pressure common rail products in the product structure. As the cost of diesel engines produced by the company accounts for only 10% of the raw materials such as scrap and pig iron. Therefore, the cost is not the main reason for the increase in the gross profit margin of the company. Therefore, even if steel prices rise in 2010, the impact on Weichai power is very limited.
According to Guojin Securities, the first key point in determining whether Weichai Power's profit margin is declining is whether the industry environment of its construction machinery and heavy trucks will change in the future. It is certain that at least in 2010, The competitive landscape of the heavy truck and loader industry will not undergo major changes, and the self-sufficiency rate of the engines of each OEM will not increase. Therefore, the business status of the next year will not change, which means that once the demand does not change negatively, the company is relatively downstream. The entire vehicle can still maintain strong bargaining power.
The production and matching of heavy-duty truck engines have a high technological content. Due to the scale and brand advantages, the industry status of Weichai is difficult to shake. In addition, Weichai will also establish its dominant position in the general powertrain field by means of radiating small-displacement engines. Galaxy Securities said that potential competitors will be hard pressed against Weichai in the short term.
The commercial vehicle industry is accelerating its recovery. Even though the semi-trailer market with the largest decline has been steadily warming up, its sales volume has shown a strong recovery. With the fourth quarter being one of the usual peak seasons, Hengtai Securities expects the company's fourth quarter revenue will be better than the third quarter, and the annual revenue can also achieve positive growth. If the company's profitability can basically stabilize at the current level, the company's fourth quarter and full Annual performance is still expected to exceed expectations.
Risk factors: The country’s macroeconomic policies have a greater impact on the company's business; the company’s control over Shaanxi Zhongqi and Fast and other companies may be limited, and there is a process of internal integration and overall synergies in business operations.
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